Friday, November 30, 2018

Profile of flooring company shows impact of Chinese tariffs

Howell County, Missouri
The full impact of the United States' trade war with China won't be clear for years to come, but a profile of a Missouri flooring business illustrates the damage tariffs have done to many American companies, and also provides some insight on the government's decision-making process in imposing those tariffs.

Real Wood Floors and its affiliated companies employ 247 people; it's the second-largest employer in Howell County, the poorest in Missouri. The biggest town in Howell County is West Plains, pop. 12,000, which voted overwhelmingly for Trump in 2016, Guy Lawson reports for The New York Times.

Real Wood Floors harvests hardwood from southern Missouri, sends it to China for finishing, which then sends it back to Missouri ready to sell. But the tariffs make that supply chain unprofitable. CEO Sam Cobb told Lawson " it was preposterous to believe that this could be done in the United States for a competitive price. Even if it could, he went on, building a factory in the United States would be not just expensive but extremely risky, given that the tariffs on China could be removed at any time by the president or some future administration."

The company had been steadily growing for years, but "in the wake of the tariffs, Real Wood had postponed five new hires, along with the purchase of a new van and truck," Lawson reports. "For the past three years, the company grew at a healthy rate of 15 percent. But now, with the new 10 percent tariff, the best-case scenario was for revenue to be flat next year — and even that seemed improbable."

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